If I co-signed for my grandson’s car and now I can’t pay for it, what will happen?

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If I co-signed for my grandson’s car and now I can’t pay for it, what will happen?

He couldn’t pay for I so I did for 1 year. We still owe $7400.

Asked on January 29, 2011 under Bankruptcy Law, Missouri

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

As a cosignor, you are as liable for the debt as your grandson. That means (1) you can be sued for the money (and if you look to be more likely than your grandson to have the money, the lender will probably go after you); and (2) if you default, you will have the default on your credit record, damagin your credit severely. If you are sued, lose, and  still don't pay, the lender may try to garnish salary (though social security and pensions are usually exempt) or put a lien on propertly. The car can be repossed if the debt is not paid; if it is, the value of the car (e.g. what it sells for at auction) will be applied vs. the debt and you will owe the balance. Cosigning is VERY dangerous--since if you have to cosign for someone, it's because they are a bad credit risk and there's a good chance you'll be left holding the bag. You can and should try to either settle the debt for less or work out a payment schedule you can meet.


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